Tax Credits for Micro Enterprises and the Self-Employed
 
 

Tax Credits for Micro Enterprises and the Self-Employed

(Rules relating to the deadline of 30 March 2017)

Micro enterprises and self-employed persons may benefit from a tax credit equivalent to 45% of eligible expenditure (subject to certain conditions). An additional bonus of 20% (total 65% tax credit) applies to undertakings operating from Gozo or female-owned undertakings.

For an eligible cost to be claimed the costs must be incurred between 1st January and 31st December (both days included) of the year preceding the year in which the claim is submitted. The deadline of 30 March 2017 applies for any eligible expenditure incurred from 1 January 2016 to 31 December 2016.

Late submissions may be accepted by not later than the extended deadline (in this case 30 November 2017) of the following year in which the expenses are incurred – however in such case the tax credit may be availed of only from the year of assessment commencing in the following year.

Eligible expenditure under these rules includes:

  1. Furbishing, refurbishing and upgrading of business premises;
  2. Investment in acquiring machinery, technology, apparatus or instruments which enhance the operations;
  3. Capital investment in Information Technology;
  4. Purchase costs of one commercial vehicle incurred over a period of 3 years;
  5. Wages costs where an increase over the last 3 years of the gross wages paid by the company exceeds 3% of the highest wage costs of the previous two (2) fiscal years (2014 - 2015).
  • The maximum tax credit available is capped to €30,000 for undertakings in Malta and €50,000 for undertakings operating in Gozo or female-owned undertakings.
  • Such capping applies for a period of three consecutive yearscommencing from any credit awarded for expenses incurred in 2014 (under the previous Micro Invest Scheme). 
  • Eligibility: main conditions to be satisfied (at the point of application) for undertakings to benefit from this Scheme:
  1. The applicant must be a single undertaking that in the two (2) fiscal years preceding the year in which the application is submitted, employed thirty (30) or less persons on Full Time (FT) contracts for at least twelve (12) months of the period (the data used to verify this condition is provided by Jobsplus);
  2. The applicant (in the case of a legal person) must employ at least one (1) person (on full or part time basis) on the date of application. The person employed may be the applicant himself in the case of self-employed persons. In any case such employment must be registered with the Jobsplus;
  3. The applicant must be a single undertaking whose turnover did not exceed €10 Million in the fiscal year preceding the year in which the application is submitted;
  4. For any eligible expenses incurred (except wages costs) a copy of each tax invoice or fiscal receipt (as applicable) must be submitted to Malta Enterprise. Alternatively a CPA Declaration can be made for this year’s Application. In it the CPA will sign the annexes and the invoices do not need to be submitted in the application form as it will be the responsibility of CPA;
  5. Start-ups are given 5 years to utilise tax credit;
  6. Unless exempted, applicants should be registered with the VAT department;
  7. Self-employed persons should be registered with Jobsplus;
  8. If applying for furbishing costs applicants must provide a permit identifying the premises as a business premises to carry the furbishing costs together with the necessary installation costs;
  9. Applicants must not be defaulting on VAT, Income Tax, and Social Security. No Tax Certificate will be issued by the Corporation prior to regularising the position with the relative departments;
  10. Persons or undertakings engaged in activities specifically excluded under the de minimis regulations (these include undertakings active in the fishery, aquaculture sectors, the agricultural sectors and certain undertakings involved in the road freight transport sector) are not eligible for this incentive;
  11. This incentive is intended to support enterprises that carry out a trade or business, hence it is not intended for voluntary organisations;
  12. The application form should be submitted all at once. Undertakings wishing to benefit from this incentive may submit one (1) application per calendar year.

Online Portal:

Applicants may also complete and submit their application via the portal which may be accessed from www.maltaenterprise.com. Applicants who opt to use the online portal may benefit from a better communication experience in relation to any clarifications that may be required. It is therefore recommended that applicants consider this procedure.

 

For further information contact:

 

David Farrugia                                                                                                  

Director – Legal & Tax Advisory                                                                 

E: david.farrugia@dfkmalta.com                                                              

 

Joseph Farrugia

Senior Manager               

E: joe.farrugia@dfkmalta.com

 

Roberto Sammut

Assistant Manager         

E: roberto.sammut@dfkmalta.com

 

*The objective of this summary is to outline the principal elements of the rules being summarized herein. Accordingly, it is not intended to be provided by way of comprehensive and definitive advice. Readers should seek professional advice by contacting DFK Malta Tax & Consultancy Limited before acting upon any information included in this document.